Behavioral Targeting Predicted To Reach $2B By 2008

Advertisers will spend $1.2 billion on behavioral targeting this year, up from $925 million in 2005, according to a report released Thursday by eMarketer. By 2008, the amount spent on behavioral targeting will double to $2.1 billion, predicts the report.

Calling behavioral targeting--sending ads to consumers based on their Web-surfing behavior--"the most ballyhooed form of online advertising," report author David Hallerman wrote that it also offers publishers the promise of "monetizing pages that would otherwise get few ads or only low-value ones."

But, Hallerman added, behavioral targeting also threatens to narrow a campaign's reach. "Targeting's key drawback is reach, or the lack of it," he wrote. "The more you slice and dice your potential audience, the more likely your campaign's reach will become, as one network ad executive told eMarketer, 'pathetic.'"

Consumers surveyed by eMarketer indicated that contextual targeting--placing ads relevant to the pages displayed--was more effective than behavioral targeting. About 62 percent of 1,000 adults surveyed told eMarketer that contextual targeting would be likely to generate a response, compared to only 17.5 percent of respondents who said the same about ads based on their past behavior.

However, 33.2 percent of those surveyed said they had no opinion or were not sure, which Hallerman said may indicate that the general public doesn't necessarily understand ad targeting. "Asking people what they want and observing what they really want often do not meet up at the same corner," he wrote. "Asking people if they want their behavior observed may not call up many positive responses. However, the reality of relevant ads, targeted by anonymous behavior, might garner a different level of support."

In fact, behavioral targeting company Tacoda in January reported that an eye-tracking study it commissioned revealed that ads shown out of context generated more looks than did in-context ads.